Section 903

Section 903.430 Allocation to Expense Groups

a) Expenses shall be allocated to expense groups as follows:

Expenses to Be Allocated		Allocation
to Expense Groups		to Expense Groups

Claim Adjust. Services: Direct Reinsurance Assumed Reinsurance Ceded
		Loss Adjust. Expenses
		Loss Adjust. Expenses
		Loss Adjust. Expenses

Commission & Brokerage:		See Commission
		and Allowances

Direct		(Subpart C, Section 903.420(c)(2))

Reinsurance Assumed		Acquisition, Field Supervision and Collection Expenses
		Acquisition, Field Supervision and Collection Expenses

Reinsurance Ceded		Acquisition, Field Supervision and Collection Expenses
		Acquisition, Field Supervision and Collection Expenses

Contingent-Net		Acquisition, Field Supervision and Collection Expenses

Policy & Membership Fees		Acquisition, Field Supervision and Collection Expenses

Allowances to Managers & Agents		See Commission and Allowances (Subpart C, Section 903.420(c)(2))

Advertising		Acquisition, Field Super. & Collec. Exp.

Boards, Bureaus & Assn.		General Expenses

Surveys & Underwriting Reports		General Expenses

Audit of Assureds' Rec.		General Expenses

Salaries		See Spec. Instructions Relating to Allocation of Salaries & Other Expenses (Subpart E)

Employee Relations &
Welfare		Overhead on Salaries

Pensions		Overhead on Salaries

Directors' Fees		Overhead on Salaries

Travel and Entertain.		Spec. Studies

Rent and Rent Items		Overhead on Salaries

Equipment		Overhead on Salaries

Printing & Stationery		Overhead on Salaries

Postage, Telephone & Telegraph, Exchange and Express		Overhead on Salaries

Legal & Auditing		Special Studies

Taxes, Licenses & Fees		Taxes

Real Estate Expenses		Investment Expenses

Real Estate Taxes		Investment Expenses

Income from Spec. Serv.		Special Studies

Miscellaneous		Special Studies

b) Definitions

For definition of the terms Overhead on Salaries & Special Studies, See Subpart B, Section 903.310(b).

c) Other Bases Permitted Or Prescribed

For those operating expense classifications permitting the basis Overhead on Salaries, any other basis of allocation may be adopted which yields more accurate results. The basis Overhead on Salaries shall not be used if clearly inappropriate.

d) Other Instructions Applicable

In making any allocations to expense groups, companies shall observe the General Instructions Regarding Allocation Bases (see Subpart E, Section 903.620).

e) Records Required

The methods followed in allocating to expense groups shall be described, kept and supported as set forth under Detail of Allocation Bases (see Subpart E, Section 903.630(g)).

The effects of the application to each operating expense classification of all bases of allocation shall be shown on records kept in clear and legible form. Such records shall be readily available for examination.